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‘Taxpayer woes’ to increase due to government Covid-support failures

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The government continues to take a bruising over its handling of the Covid crisis, after a recent PAC report highlighted a host of errors in its pandemic support scheme. 

18th May 2022
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A scathing report released by the Public Accounts Committee (PAC) has shone an unflattering light on the government’s approach to Covid support. The PAC argued that their methods “will add billions and billions to taxpayer woes” from fraud and errors created due to lax safeguarding and response to warning signs.

Focusing its ire chiefly on the Department for Business, Energy & Industrial Strategy’s (BEIS) approach to the pandemic, the PAC report noted that the government body, while undoubtedly helping many businesses that would otherwise have struggled throughout the pandemic, has left a gaping hole in its budget that will invariably be passed onto the taxpayer.

The current bill estimations from BEIS sit at £4.9bn worth of Covid-support funds lost to fraud and error, with this amount likely to rise further “as assessments catch up with payments made,” the report notes. This particularly bleak outcome has left the PAC growing increasingly concerned over how long these fraudulent and erroneous claims were left unchecked and has questioned the department’s ability to predict such issues in the future.

Lack of scrutiny 

During the 2020–21 period, the number of companies being registered was 20% higher than the previous five years, with 170,000 setting up shop at the height of the pandemic. This dramatic increase, the PAC contends, should have been “a warning sign warranting closer scrutiny”.

On top of the £4.9bn lost through the Covid-support scheme, the BEIS also distributed a total of £21.8bn to local authorities, but admitted to “lacking information on recipients” of grant payments for said authorities. 

According to the report, only half of £21.8bn has been investigated, with losses caused by fraudulent activity already amounting to £1bn. In much the same way as the Covid-support scheme, further assessment is likely to discover further losses in the coming months. 

Systemic issues

The report also takes aim at the handling of the Horizon scandal, which saw multiple postmasters and mistresses falsely accused of fraud due to a system error. In response to these injustices, the Post Office set up the Horizon Historical Shortfall Scheme to compensate those affected by the scandal.

Current figures for compensation sit at £153m, with an £89m/£65m split between the Post Office and BEIS respectively, as the Secretary of State for the Department is the sole shareholder of the Post Office. The report notes that, with further compensation for criminal convictions, this figure could rise to £780m, most of which will likely come out of the taxpayers’ pocket. 

This scathing attack on a governmental body by the PAC is but one in a list of indictments of the current system, with their previous report focusing on systemic failings within HMRC due to their mismanagement of tax debt. 

Dame Meg Hillier MP, chair of the Public Accounts Committee, commented on the report, saying: “These lessons should have been learned from the banking crisis a decade ago, and could have been prepared in the government’s pandemic exercises. These mistakes must be written out of future crisis responses, now, and the government would do well to apply the learnings to the mounting, interrelated crises it now faces in climate change, energy supply and the cost of living.”

The report was keen to put forward a series of recommendations on how to rectify these issues, however, whether the department acts on them will remain to be seen. 

Replies (3)

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By Hugo Fair
18th May 2022 10:46

"whether the department acts on them (a series of recommendations) will remain to be seen" is indeed the key issue ... but it's unfair to pick on BEIS and lay all the blame at its door.

It was only created as a Ministry 3 years before the pandemic struck - and was obviously not the inventor of the various 'support schemes' unveiled at great speed (and without sufficient forethought).

All power to Meg Hillier's elbow ... but she's careful to lay the blame at the feet of Government, not one of the ministries lumbered with ill-conceived decisions.

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Tornado
By Tornado
18th May 2022 15:47

With such a large amount of fraud involved, perhaps this is really a matter of the what people have done rather than what the Government have done.

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By AndyC555
23rd May 2022 12:02

These really shouldn't be referred to as 'Covid support measures'.

They were lockdown support measures.

As Sweden showed, and as the outcomes from lockdown severity which varied widely around the world also seems to show, whilst the economic and social impact of the lockdowns is obvious, the benefits are not.

A lockdown may have been justified on the precautionary principle in March 2020, but nowhere was the proportionality principle applied. We could reduce deaths from road traffic accidents to nil in the UK if we banned all transport by road. We don't, for obvious reasons.

In 2011 (probably at great expense) the government prepared a 'flu pandemic preparedness' report which anticipated as many as 300,000 deaths in a 4 month period from a virulent new flu strain. Lockdowns, face masks, school closures and border closures were all rejected in that report as unlikely to be effective and, at best, acting as a delay not a solution. The report suggested such measures would cause more economic/social damage than health benefit.

Sure, look into how measures which were put in place were handled. But the far more important question is whether they should have been implemented in the first place.

There were three major pandemics in the 20th century 'Spanish' flu, 'Hong Kong' flu and 'Asian' flu.

There will be further pandemics this century. Let's just hope we learn the lessons of the Covid-19 pandemic.

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